Should I move shares in stocks and shares to ISA

jojo009

I have shares in a stocks and shares account. Should I sell them and buy them again in Stocks and shares ISA? There are costs involved in doing this but I wanted to keep them long term and know ISA profits are tax free. 

With stocks and shares account any profits over £12,300 would be subject to tax...but don’t know what future profits could be but plan to invest for the long term. 

Any advice? Stick with stocks and shares account or sell up and repurchase in ISA? 

bowlhead99

In an ISA, the dividend income is free of UK tax and any capital gains are tax free.

Outside an ISA you have to keep records of your costs and dividends and sales proceeds so that you can prove that there's no tax to pay (even if you know there is no tax to pay), which can be a bit of a pain.

And as you say, only the first £12.3k of gains in a tax year is exempt from capital gains tax, so there will be tax to pay if you make big gains that you can't manage to spread over multiple tax years (e.g. by selling some shares one year and some the next year and  the next year to make use of multiple annual exemptions). As shares can be volatile there is a risk that if you avoid selling some shares until your next annual exemptions are available, you don't make as much gain (or make a loss) and would have been better to pay the tax. All that is avoided if you had just used an ISA.

So, if you are buying more shares from now on it would make sense to do that in an ISA. As for the ones you already have outside the ISA - if it's not a lot of value at the moment, probably the gains will be manageable. At some point down the line if the numbers are getting bigger, you could always make some sales and buy back in an ISA, , if you don't want to do that now. 

Some ISA providers have a 'bed and ISA' feature where you can ask them to sell some shares in your general investment account, move the proceeds to an ISA account with them, and buy the shares back inside the ISA, and only charge you one lot of trading costs (i.e. the buy or the sell but not both). If the spread between buy and sell price isn't very big, you will end up with pretty much the same number of shares and have no further tax worries.

If the shares had grown to a really large value (enough that gains tax was likely to be a problem) you might not have enough space in your annual ISA allowance to sell all the unwrapped shares you want to sell and be able to fit tall the proceeds into an ISA wrapper to rebuy other assets at that point, because the ISA has an annual subscription limit.  So, if you think it would be a good idea to move them into an ISA eventually, you could just do it now and get it out of the way while the numbers are small.